Recently I took the jump from running a multi-billion dollar division of Cisco to becoming founder and chief executive of an Irish-Californian software start-up, Altocloud.
It has been a wild rocket ride so far – exhilarating but scary. I’ve been an investor and adviser with many start-ups, in Silicon Valley and Ireland, but nothing can prepare you for the feeling of launching yourself into the unknown with a small group of comrades, and only a rough idea of the journey ahead. It is different. The highs are higher and the lows are lower.
Moments of hubris and euphoria are quickly followed by periods of questioning and self-doubt. Pride in our team is mixed with fear that I will let them down. Amidst this sea of contrasting emotions my North Star is faith. It is something that I have always had. Faith that no matter what comes our way, we can move past it, and not be limited by fear. Fear is in the air for entrepreneurs, but faith is the oxygen that keeps them pushing against the biases and conventional wisdom of their environment. Faith in the team, faith in the vision, faith in the future.
In the world of venture capital, some biases are deeply held. My least favourite is what I call the founder-scale fallacy, which can be summarised as: “founder chief executives can’t scale to big company”.
This usually happens in the following way: founder chief executive leads the business through initial seed funding, product development and customer acquisition. With a good trajectory, the founder succeeds in raising a bigger funding round, but the new investors decide that it is time to bring in a "real" chief executive – someone who can scale the company through its next stage of growth and perhaps lead the company to a successful exit, making lots of money for all concerned. This has played out recently at a number of Irish startups with very mixed results. Of Silicon Valley venture capitalists, Andreessen Horowitz has taken a stand against the founder-scale fallacy, and Ben Horowitz has championed the founding chief executive in his blog. His reasoning is straightforward: founding chief executives do better than professional ones in building great companies – look at DEC, Intel, HP, Amazon, Apple, Microsoft, Facebook.
Liam Casey of PCH is a great example of a successful Irish founding chief executive. Interestingly for me, the counter example is Cisco, where professional chief executive John Morgrige and John Chambers grew the company from $5 million in revenue to over $40 billion.
All of these founding chief executives had what Horowitz calls “founder’s courage – the ability to innovate despite the doubters”. I have spent a good chunk of my career scaling technology businesses in large companies. In moments of self-doubt I have been wondering if there is a corollary to the founder-scale fallacy. Can a “big company guy” be a successful founder? The reason I left Cisco was to answer that question for myself.
It is also an important question for us in Ireland to ponder. With over 100,000 people employed in US multinationals, what are the chances that great founders will come out of those companies? In the US there are great examples: Gordon Moore and Bob Noyce left Fairchild to found Intel, Steve Wozniak came out of HP and the founders of PeopleSoft, Siebel and Salesforce.com came out of Oracle.
Explosion of entrepreneurship
The closure of Digital in Galway led to an explosion of entrepreneurship, releasing serial entrepreneurs like Bryan Campbell of Toucan Technology and John Brosnan of Netfort. The indigenous medical device industry has been led by founders who came out of big companies like Boston Scientific. Sounds great right? One note of caution is that both of these success stories came out of companies that have invested in R&D in Ireland. Bryan Campbell couldn't have set up a chip design company of he didn't design chips in DEC. We are most likely to see founders coming out of companies that are doing significant engineering in Ireland, as opposed to companies focused on shared services and call centres.
At Altocloud we want to change how customers communicate with companies. I have great co-founders and we are committed to the full journey. We want to disprove both the founder-scale fallacy and its corollary. We are not entirely sure of the destination, but we have the faith to overcome the fear that could slow us down. Because fear is finite and faith is infinite.